Budget 2017 and the impact on Irish Businesses

This week’s focus turns to Ireland’s Minister for Finance, Michael Noonan as he revealed Budget 2017. Noonan addressed the Dáil with the following introductory statement:

The UK’s decision to exit the EU represents a real risk to our economy given the close links and the high level of trade between us. Around 16% of Irish exports go to the UK, but 40% of indigenous company exports go there. In turn, Ireland is the UK’s fifth biggest export market. Over €1.2 Billion of goods and services are exchanged between us on a weekly basis. This trade supports 400,000 jobs, split evenly between two islands, with many more jobs in the supply chain.

The 2017 Budget has outlined the following for Irish businesses:

An extension along with a number of amendments has been made to the foreign earnings deduction to help Irish exporters diversify their export and import markets.

An extension has been applied to the argumentative Special Assignee Relief Programme (SARP) in order to help businesses relocate key staff to Ireland.

A reduction in capital gains tax of 10% that applies to disposals by Entrepreneurs of qualifying assets will be applied.

In the agri sector an income-averaging “step- out” has been introduced. This aims to help with the expected increase in demand of food products after harsh price fluctuations.

Minimum Wage has been increased from the current €9.15 to €9.25, increasing staffing costs.

The Earned Income Tax Credit for small business owners has increased to €950.

The introduction of a new ‘Help to Buy Scheme’ for the Construction and Property Sector has been introduced. The Home Renovation Incentive will also be extended for a further two years.

The tourist industry retains its 9% VAT to help maintain competitiveness and attract people to Ireland.

Ireland’s corporation tax rate of 12.5% will not be changed.

A new SME share-based incentive scheme is also to be introduced into next year’s budget. The Irish Government have also planned to put aside approximately €1 billion a year from 2018 to ensure that the public finances can withstand any Brexit-related shocks down the road.

AJ Noonan – Chairman of the Small Firms Association (SFA) and Micheál Martin – Fianna Fáil leader reprimanded the Government’s 2017 budget saying that it did not react to the current situation of Brexit. AJ Noonan criticised the budget for “making our tax system competitive with the UK in areas such as CGT”.

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